By Tetsushi Kajimoto
TOKYO (Reuters) – Japanese companies raised spending on plant and equipment in January-March at the fastest rate since 2015, led by a recovery in car output and chip making as well as service-sector investment in real-estate, reflecting moderate economic growth.
Capital spending has been a bright spot for Japan’s economy, the world’s third largest, which emerged from a pandemic-induced slump in the first quarter buoyed by rebounding consumption and surprise gains in business expenditure.
Japanese firms raised capital expenditure by 11.0% in January-March from the same period a year earlier, posting an eighth straight quarter of gains, Ministry of Finance (MOF) data showed on Thursday.
That marked the fastest gain since July-September in 2015.
On a seasonally-adjusted basis, capital expenditure rose 2.3% quarter-on-quarter in January-March.
The MOF data is used to calculate revised gross domestic product figures for the quarter due on June 8 and follows a preliminary estimate the economy grew by an annualised 1.6% in January-March, twice as fast as expected.
By sector, manufacturers raised capital expenditure by 11.3% year-on-year in the first quarter, while service-sector capital spending rose by 10.8% in the same period, according to the data.
In a positive sign of future appetite for more investment and further wage hikes, Japanese firms increased recurring profits by 4.3% year-on-year in January-March to 23.8 trillion yen ($176.23 billion), a first-quarter record.
By sector, manufacturers’ profits declined by 15.7% year-on-year in the first quarter, while service-sector profits grew by 17.2% in the same period.
The MOF data also showed Japanese firms’ sales grew 5.0% in the January-March quarter year-on-year.
($1 = 135.0500 yen)
(Reporting by Tetsushi Kajimoto; Editing by Jacqueline Wong and Jamie Freed)
